Please ensure Javascript is enabled for purposes of website accessibility

Expedia Pulls Its 2020 Guidance as Coronavirus Pandemic Grows

By Jon Quast - Mar 13, 2020 at 11:20AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The online travel agency had tried to account for COVID-19 in its forecasts, but conditions for the travel industry have deteriorated markedly since then.

On Friday, online travel-booking platform Expedia (EXPE 1.66%) pulled its 2020 guidance for adjusted EBITDA. Last year, its adjusted EBITDA came in at $2.1 billion, and it had previously been forecasting double-digit percentage growth this year. However, when it provided that outlook on Feb. 13, the company stated that it was expecting a $30 million to $40 million EBITDA hit from coronavirus in the first quarter. But with the outbreak having reached pandemic levels, the company now sees that prediction as too optimistic.

"As COVID-19 has rapidly spread from Asia to Europe and North America over the past few weeks, travel trends have continued to worsen," said Chairman Barry Diller and Vice Chairman Peter Kern in a press release. "It remains difficult to predict how long this pandemic will persist, and given the lack of visibility on our trends we've decided to withdraw our 2020 guidance."

Notably, many nations' travel restrictions were implemented late in this quarter, suggesting that the hardest hit to the travel industry could come later in the year.

Similarly, on Monday, Booking Holdings (BKNG 1.09%) pulled its first-quarter 2020 guidance. 

An image of a map, plane, and boarding passes.

Image source: Getty Images.

Bracing for the worst

On Feb. 26, Booking Holdings held its fourth-quarter earnings call, and issued Q1 guidance that attempted to factor in the negative impact of COVID-19. The company guided for a non-GAAP (adjusted) revenue decline of 3% to 7% on a constant currency basis, adjusted EBITDA of $560 million to $590 million, and non-GAAP earnings per share of $9.05 to $9.65 -- down 14% to 19% year over year. That it felt compelled to pull that guidance less than two weeks later suggests just how rapidly conditions in the travel industry are declining.

Expedia so far has only withdrawn its adjusted EBITDA guidance, as it monitors the rapidly changing situation. However, shareholders should also note that it has suspended its share buyback program. From early December through February, it was on a share-buying spree -- repurchasing 5.8 million shares for $634 million. Excluding undisclosed repurchases in the last month, it still has approximately 23 million shares worth of buybacks on its authorization, and at steep discounts to the average $110.72 per share it paid in December.

Given the considerable uncertainty surrounding the coronavirus pandemic, Expedia is choosing to maintain liquidity for now, even if its shares are down around 55% from their 52-week highs.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Expedia, Inc. Stock Quote
Expedia, Inc.
EXPE
$96.40 (1.66%) $1.57
Booking Holdings Stock Quote
Booking Holdings
BKNG
$1,767.98 (1.09%) $18.99

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.